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The agony of central power: Fiscal federalism in the German Reich

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  • HEFEKER, CARSTEN

Abstract

This article revisits the German system of fiscal federalism between unification in 1871 and hyper-inflation in 1923. I argue that the ill designed fiscal system led to systematically excessive debt for the Reich. The system was the outcome of overlapping distributional conflicts between centre and states, and between capital and labour. It was also responsible for the debt problems arising in World War I and the unsuccessful attempts at fiscal reforms during and after the war. Ultimately, these distributional conflicts contributed to the hyper-inflation in Germany. The German example also has implications for the debate about fiscal federalism in the European Union.

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  • Hefeker, Carsten, 2001. "The agony of central power: Fiscal federalism in the German Reich," European Review of Economic History, Cambridge University Press, vol. 5(1), pages 119-142, April.
    • Handle: RePEc:cup:ereveh:v:5:y:2001:i:01:p:119-142_00
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    Cited by:

    1. Michael D. Bordo & Lars Jonung & Agnieszka Markiewicz, 2013. "A Fiscal Union for the Euro: Some Lessons from History ," CESifo Economic Studies, CESifo Group, vol. 59(3), pages 449-488, September.
    2. Forrest Capie, 1998. "Monetary Unions in Historical Perspective: What Future for the Euro in the International Financial System," Open Economies Review, Springer, vol. 9(1), pages 447-466, January.
    3. Truger, Achim & Jacoby, Wade, 2002. "Tax Reforms and "Modell Deutschland": Lessons from Four Years of Red-Green Tax-Policy," Institute of European Studies, Working Paper Series qt31866224, Institute of European Studies, UC Berkeley.
    4. Burret Heiko T. & Feld Lars P. & Köhler Ekkehard A., 2013. "Sustainability of Public Debt in Germany – Historical Considerations and Time Series Evidence," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 233(3), pages 291-335, June.
    5. Hefeker, Carsten, 2003. "Ressourcenverteilung in der EU: Eine polit-ökonomische Perspektive," HWWA Discussion Papers 252, Hamburg Institute of International Economics (HWWA).
    6. Alexander F. McQuoid & Yi Ding & Cem Karayalcin, 2017. "Fiscal Federalism, Fiscal Reform, and Economic Growth in China," Departmental Working Papers 57, United States Naval Academy Department of Economics.
    7. José Alves, 2018. "Tax incidence and fiscal systems: some problems on tax compared history in XIX and XX centuries," Working Papers REM 2018/45, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

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